Thursday, September 3, 2015

Shepherd Profit-Potential Defectors

According to the old saw, it’s much cheaper to keep and sell to a current customer than to win over a brand new customer. But what about wooing back former customers? Is it worth it?
     Researchers at Georgia State University found, as you might expect, that it depends on why those former customers left you. The research findings then went beyond this to indicate that the most effective recipe for shepherding defectors is to blend a short-term price discount with a bonus burst of enhanced service.
     Yet, “effective” is not necessarily the same as “profitable.” Service upgrades cost you resources, and discounted prices deprive you of some monetary return. Prioritize your efforts on the defectors who you believe left for service-related reasons rather than price. You’re less likely to again lose that first group when you raise prices, according to the research.
     Also give priority to former customers whose breakup with you had been gracious. Upon return, they’re the ones most often becoming profitable purchasers if they had expressed high satisfaction with you or even recommended you to others at some point during the business relationship last time.
     Other studies find that you increase the potential profitability of returning flocks if you dissolve any disgruntlement before a departure. Sometimes you’re no longer able to adequately satisfy a customer who’s been frequenting your store. It’s time for a breakup. When this happens, the emotions probably won’t be nearly as intense as in the breakup of a relationship with a lover or the termination of an employment relationship with one of your staff. Still, there will indeed be emotions, and unless you handle matters properly, those emotions might result in consequences harmful to your business.
     Those emotions often include shame and insecurity, according to researchers at University of Western Ontario and Queens University in Kingston, Ontario. The root of it all is the customer’s belief that the retailer has betrayed the customer’s trust in them.
     Keep the relationship alive. Make the last memory of your store one of gracious respect. After they get away long enough to relax their shame and insecurity and to correct their belief that you’ve betrayed their trust, they might come back.
     At the same time, place the lowest priority on shepherding any former customers who had cost more than they were worth. For them, keep chanting to yourself, “Whew, they’re gone,” instead of, “Woo them back.”

For your profitability: Sell Well: What Really Moves Your Shoppers

Click below for more: 
Dissolve Disgruntlement Before Goodbye
Prune Out Cross-Buyers Who Aren’t Plums


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